Uk House-Building Industry Analysis

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  • Topic: Barratt Developments, FTSE 250 Index, Persimmon plc
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  • Published : April 26, 2013
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Industry analysis:
According to report of Key Note about house building industry in 2012, the market has been affected by the crisis of economic in over the world and the national financial difficulties in recent years. The demand for new building new house significantly still require in high lever, however there are some barriers such as affordability and mortgage to obstruct the recovery of housebuilding market. Output value of UK housebuilding in 2012 reached £35.02bn and representing increase 2.3% by last year (Key Note). The value of housebuilding is devised into two main activities: new building, and repair, maintenance and improvement (RM&I) in both sectors: private and public sectors. Demands of both social and individual house in UK still increased slightly outstrip supply in recently years. From 2009, nearly 50% house demand in UK was decreased. However, private sector has a clightly recovery in 2010 and 2011 (Key Note). To keep the recovery for market, UK government was introduced some funding initiatives to improve the housebuilding and house markets. In recent year, supporting packages from government and sold out public land to get more money for stalled construction site. Key Note also gave the prediction that annual growth can recover with improvement of market between 2012 and 2016.

Figure [ 1 ]: HOUSEHOLD ESTIMATES AND PROJECTION, UK (RICS RESEARCH 2010) Customer:
With two sectors in house building industry, the range of customer is large from the public requirement to the individual construction. Demand for new building come both public and private clients.

Persimmon plc:
History:
In 1972, Duncan Davidson – Life President – started business in York by established Persimmon Company. The main business operates under Persimmon Homes Limited, Westbury Partnerships and Charles Church Developments Limited. Besides that, the new brand name Space4 launched in 2001 to provide the solution for house problems with the largest automated timber frame manufactory in the UK (Persimmon website). In 1985, this is first time Persimmon PLC appeared on the London Stock Exchange (Persimmon website). Growth:

Even has the strongly decrease from 2008, the total houses were sold in 2011-2012 has increased slightly. Revenue also shows the recovery from £1.42bn in 2009 to £1.72bn in 2012. With the recovery in business and all market, cash return/ dividend per share has increased strongly by 75p in 2012(Annual report 2012).

Figure [ 2 ]: UNIT SALES

Figure [ 3 ]: REVENUE

Figure [ 4 ]: CASH RETURN / DEVIDEND PER SHARE

Shareholder:
Major shareholder| Number of voting rights| Percentage of total voting rights| Allianz AG| 18098600| 6.03|
Ameriprise Financial Inc and subsidiaries| 15321191| 5.09| AXA SA| 14923488| 4.97|
Templeton Foreign Fund| 14827805| 4.94|
Aberdeen Asset Management’s subsidiaries| 14166097| 4.70| BlackRock Inc| 13818947| 4.59|

Performance:
The Persimmon PLC showed the recovery strongly in 2012 as same time with recovery of market. It means the company ready to continue improve in future. Increasing in unit sales brought the highly revenue in 2012 by +12% (annual report 2012). Free cash flow also increases about 49% from 2011 to £179m before dividend. Furthermore, about 38% land plots converted successfully during 2012. The cash amount increased to show the high liquidity for company. With dividend at 75p in 2012 (annual report 2012), Persimmon PLC gave investors the strongly commitment about the development of organization. Productions:

Continue with history business, Persimmon PLC and its famous branches gave the market vary quality production. Persimmon Homes Limited was known as builder quality three, four, or five bed detached properties. Other products are two and three bed town house, semi-detached house, bungalows and apartment. While other main branch – Charles Church Development Limited – has long history about design and build comfortable...
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